Mortgage servicer Nationstar, which does business as Mr. Cooper, agreed to pay a $74.5 million settlement with the Consumer Financial Protection Bureau, state attorneys general and bank regulators for violating a variety of federal laws designed to protect borrowers.
Regulators had accused Mr. Cooper of violating the law from 2012 to 2015 by:
- Failing to identify thousands of loans with existing in-flight modifications and failing to recognize some transferred loans with pending loss mitigation applications or trial modification plans or failing to identify and honor other borrowers’ loan modification agreements.
- Foreclosing on borrowers to whom it had promised foreclosure holds while they applied for loss mitigation relief.
- Improperly increasing borrowers’ permanent, modified monthly loan payments.
- Failing to timely disburse borrowers’ tax payments from their escrow accounts.
- Failing to properly conduct escrow analyses for borrowers during bankruptcy proceedings.
- Failing to timely remove private mortgage insurance from borrowers’ accounts.
“Mortgage servicers are entrusted with handling significant financial transactions for millions of Americans, including struggling homeowners,” CFPB Director Kathleen L. Kraninger said. “Nationstar broke that trust by engaging in unfair and deceptive practices prohibited by the Consumer Financial Protection Act of 2010, as well as violations of the Real Estate Settlement Procedures Act and the Homeowner’s Protection Act.”
If approved by the court, CFPB said, the settlement would require Mr. Cooper to pay $73 million to 40,000 borrowers, in addition to a $1.5 million civil penalty to the CFPB.
Mr. Cooper said the settlement includes restitution the company already has provided to customers during the last six years, in addition to $28.6 million that the company will pay once the judgment is approved by the court.
“We are pleased to resolve this matter. When these issues were identified several years ago, we immediately made restitution to our impacted customers and invested in process improvements to prevent reoccurrence,” Mr. Cooper Chairman and CEO Jay Bray said.
“Since then, we have continued to invest in technology, people, and leadership to ensure that our compliance and risk management programs not only meet our regulators’ expectations but also support sustainable growth and maintain our position as an industry leader. In addition, we have invested in developing a culture of customer advocacy that extends throughout all levels of the organization, from our team members who serve our customers every day to our senior leadership. The results of these improvements and investments are evident in key measurements of customer experience, including the number of customer complaints, which have fallen to record lows.”
The settlements include agreements with attorneys general from all 50 states and the District of Columbia and bank regulators from 53 jurisdictions covering 48 states and Puerto Rico, the Virgin Islands, and the District of Columbia.
“This settlement demonstrates the crucial role of state financial services regulators in ensuring that homeowners are protected as they obtain and pay down their mortgages—especially homeowners who may be struggling with making their payments,” Illinois Department of Financial and Professional Regulation Secretary Deborah Hagan said. “This resolution demonstrates that a commitment to government coordination provides a path to efficient, effective, and comprehensive outcomes for both consumers and for Mr. Cooper, who will be held to the highest operational standards as it continues to provide mortgage services across the nation.”